2016 (4) TMI 1442 - HC - Companies Law

Court Grants Dispensation for Equity Shareholders & Creditors in Company Amalgamation Scheme

The court granted dispensation from convening meetings of Equity Shareholders and Creditors of the Applicant Company under a Scheme of Amalgamation ... Scheme of Amalgamation - Dispensation of meetings of equity shareholders - Dispensation of meetings of creditors - Protection of creditors' interests - Reliance on written shareholder consents - Reliance on chartered accountant's certificate of net worthDispensation of meetings of equity shareholders - Reliance on written shareholder consents - Dispensation of convening the meeting of the equity shareholders of the transferee company in relation to the proposed Scheme of Amalgamation - HELD THAT: - The Court noted that all equity shareholders of Kunvarji Fincorp Private Limited had given written consent to the Scheme and that the consent letters were placed on record as Exhibit 'D' together with a certificate confirming the status of the shareholders and receipt of those consents at Exhibit 'E'. In view of the unanimous written consents and the materials on record, the Court concluded that convening a shareholders' meeting was unnecessary and granted dispensation from holding such a meeting under the Scheme of Amalgamation filed under Sections 391-394 of the Companies Act, 1956. [Paras 3]Dispensation from convening the meeting of the equity shareholders granted.Dispensation of meetings of creditors - Protection of creditors' interests - Reliance on chartered accountant's certificate of net worth - Dispensation of convening the meeting of the creditors of the transferee company in relation to the proposed Scheme of Amalgamation - HELD THAT: - The affidavit in support of the Judges' Summons asserted that the rights and interests of the transferee company's creditors would not be prejudicially affected by the Scheme. The Court examined a chartered accountant's certificate placed on record as Exhibit 'F', which certified that the transferee company's net worth was substantially positive both pre-Scheme and on a projected post-Scheme basis. Having regard to the assurance in the affidavit and the CA certificate demonstrating a positive net worth, the Court was satisfied that creditors' interests would not be prejudiced and therefore dispensed with convening a creditors' meeting. [Paras 4]Dispensation from convening the meeting of the creditors granted.Final Conclusion: Application by Kunvarji Fincorp Private Limited for dispensation of meetings of its equity shareholders and creditors in connection with the proposed Scheme of Amalgamation is allowed; the application is disposed of. Issues:1. Scheme of Amalgamation under Sections 391 to 394 of the Companies Act, 1956.2. Dispensation of meetings of Equity Shareholders and Creditors of the Applicant Company.Analysis:1. The judgment pertains to a Scheme of Amalgamation of two companies with another company under Sections 391 to 394 of the Companies Act, 1956. The Applicant Transferee company filed an application seeking dispensation of meetings of Equity Shareholders and Creditors. The Equity Shareholders of the company had approved the Scheme through written consent letters, which were annexed with the application. A certificate confirming the status of the Shareholders and the receipt of consent letters was also provided. The Court, after considering the submissions, granted dispensation from convening the meeting of Equity Shareholders of the Applicant Company.2. The Court was apprised of the contentions regarding the rights and interests of the Creditors of the Transferee Company not being prejudicially affected by the Scheme. A certificate from a Chartered Accountant confirmed the Net Worth of the Transferee Company to be positive both before and after the Scheme. The certificate was placed on record as Exhibit ‘F’. Based on these submissions and circumstances, the Court granted dispensation from convening the meetings of the Creditors of the Applicant Company. The application was disposed of after considering all relevant factors and submissions presented before the Court.